On December $11,2024,$ Bank of Canada is expected to announce its final interest rate decision for the year. It is highly likely for the Bank to reduce the policy interest rate. Meanwhile, the US federal reserve is less likely to reduce the policy rate.

a$.$ Briefly explain the likely effect of the policy decisions on the exchange rate of the Canadian dollar against the US dollar $(2$ points$)$

b$.$ Predict the likely effect on the Canadian trade balance, all else remaining the same $(3$ points$)$